Deutsche Asset Management, which manages a total of €24 billion in European fixed-income assets, is looking at increasing its exposure to European corporate credits. Keith Patton, London-based portfolio manager, says the firm is long duration on government bonds and maintains a neutral weighting to corporate debt, but would like to increase that allocation. "Given [that] the outlook is extremely positive for the long end [of the government yield curve], however, the current climate of risk aversion and slow-down in growth has meant forecasting the long end has been a difficult process," said Patton. The firm is concentrated in the seven- to eight-year portion of the government yield curve.
Patton said the firm favors utilities, telecoms and automobile manufacturers. "We're looking at opportunities in the new issue market to increase our positions," he said, declining to say which credits in particular are under consideration.
Within the government debt sector, DeAm is underweight the so-called peripheral markets of Italy, Greece and Spain. However, he says the firm is taking under consideration recent French Treasury announcements regarding debt management and the favorable outlook for the Italian budget situation, and their impact on swaps. DeAm is currently reviewing its peripheral exposure.
DeAm benchmarks some European government and corporate debt mandates against the Lehman Brothers Euro aggregate bond index and the Salomon Smith Barney Euro big index.
